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Impact of the Global Financial Crisis on Mining in Southern Africa

It is projected that if the economy does not improve within the next two years, more than half a million mineworkers in the region will lose their jobs. It is estimated that more than 25% of mineworkers are HIV positive. Only two countries reviewed in the study have sufficient reserves to deal with a long-term recession.

This study is, firstly, to provide an overview of the mining sector in the region, and the social consequences of the downturn in this sector over the last quarter of 2008 and first quarter of 2009. It is, secondly, to profile the mining industries in each of the following countries: Angola, Botswana, the Democratic Republic of Congo, Malawi, Namibia, South Africa, Zambia and Zimbabwe. Views of affected parties are included, and an outline is provided of the national socio-economic and political consequences of the global financial crisis on this industry in each of the eight countries. The current economic situation has left few industries untouched and mining worldwide (and in Southern Africa in particular) has been severely affected. The boom which came with an increase in the price of oil and minerals was interrupted in the last quarter of 2008. A reverse in price has seen a decrease in fiscal resources for treasuries in Southern Africa. This has started to impact on social delivery for central and local governments. It is estimated that the impact will be felt much more acutely in 2009.

Mining is cyclical by nature and mining companies take a long-term view on their operations. Evidence shows that when an economic downturn is on the cards, cutting back on jobs is often the first port of call to reduce costs. On the positive side, there are companies that adopt a long- term view to employment of staff, and work with various roleplayers to lessen the negative effects of economic downturns. It is projected that if the economy does not improve within the next two years, more than half a million mineworkers in the region will lose their jobs. It is estimated that more than 25% of mineworkers are HIV positive. Only two countries reviewed in the study have sufficient reserves to deal with a long-term recession.

There is particular concern about increased poverty levels, the impact and cost of HIV and AIDS on people and governments, decreased social spending by companies and countries, and the time it will take to get employment back to levels seen in 2008. Africa is one of the richest continents in the world when it comes to mineral resources, but has some of the poorest people. We have to ask ourselves at this point in history:

• Some of the biggest mining companies in the world built their wealth on the mineral resources of Africa – are they contributing and reacting positively during this downturn?

• How do new entrants to Africa view the continent – as a cash cow or as a long-term partner?

• Are governments ready and able to ensure that the impact of the current economic situation is limited, and do their long-term plans include scenarios and implementation plans to deal with the situation?

• Are trade unions and civil society organisations working together with the private and public sectors to ensure the

current economic situation does not push Africa and her people further into the depths of poverty?

• Are Africa’s international partners showing good will to support Africa in these difficult times?

• Are individuals prepared to accept their responsibility as citizens and work with the various role-players to build

an Africa for future generations and ensure an African Renaissance?

The findings of this study show that although various measures have been put in place to reduce the impact of the crisis, not all countries, companies and role-players are equally well prepared for the proverbial “seven lean years”. In the context of this global financial crisis, nobody has been able to make accurate predictions about short-, medium- and long-term impacts on mining (and on countries in general). This is the first report of its kind. It moves from anecdotes to facts.

We hope that the findings of this study will guide governments, current and future players in the extractive industries, trade unions, civil society and citizens to learn from the lessons of the past and to deal creatively, innovatively and responsibly with the current situation facing Africa, and take her into the future in a sustainable

Behind SARW’s appointment are the various activities since 2010 to tackle the illegal exploitation of natural resources in the Great Lakes Region, the Alternative Summit on the margins of ICGLR Heads of State Special Summit.

The mining industry contributes significantly to the hardship experienced by black women in rural areas of South Africa. For decades, mining houses have drawn in young black men for labour, only for many to return home sick, with little to show for years spent toiling underground.